Artificial Intelligence in Japan

Introduction

Artificial intelligence (AI) is at the heart of Japan’s national strategy for economic revitalization, societal resilience, and global competitiveness in 2025. As the world’s most rapidly aging society and a long-standing leader in robotics and manufacturing, Japan’s approach to AI is shaped by unique demographic, cultural, and industrial factors. The country’s AI ecosystem is characterized by a blend of government-driven innovation policies, a robust research and academic infrastructure, a vibrant mix of established corporations and dynamic startups, and a pragmatic, “soft-law” governance model that emphasizes agility, interoperability, and international cooperation. This report provides a comprehensive overview of the current state of AI in Japan, examining national strategies and policies, leading research institutions, major companies and startups, sectoral applications and breakthroughs, infrastructure, international partnerships, investment trends, and the challenges and opportunities that define Japan’s AI landscape in 2025.

1. National AI Strategy and Policy Framework

1.1 Historical Evolution and Strategic Vision

Japan’s AI strategy has evolved through several phases, reflecting shifts in technological paradigms, societal needs, and global competition. The government’s AI policy journey began in earnest in the mid-2010s, with the launch of the “Society 5.0” vision—a human-centered, super-smart society integrating cyberspace and physical space to address challenges such as an aging population, labor shortages, and disaster resilience^[1][2]. Early strategies focused on R&D, education reform, and infrastructure, gradually expanding to encompass societal implementation, ethics, and international leadership.

The “AI Strategy 2019” set four strategic objectives: human resource development, industrial competitiveness, sustainable society, and R&D systems. Subsequent revisions, including the “AI Strategy 2022,” introduced new priorities such as crisis resilience (pandemics, disasters), digital government, and the integration of AI with quantum, bio, and material sciences^[2]. The government’s philosophy is rooted in the “Human-centered AI Social Principles” (2019), emphasizing dignity, diversity and inclusion, and sustainability.

1.2 The AI Promotion Act (2025): An Innovation-First Legal Framework

A major milestone was reached with the enactment of the Act on Promotion of Research and Development, and Utilization of Artificial Intelligence-related Technology (the “AI Promotion Act”) in May 2025, which came into full effect in September 2025^[3][4]. This law marks a deliberate shift from voluntary guidance to a national, innovation-first framework. Its key features include:

• Purpose: Promote AI R&D and utilization to improve quality of life and economic development, while mitigating risks.
• Principles: Enhance R&D capabilities and competitiveness; promote initiatives from R&D to social implementation; ensure transparency and risk management; lead international cooperation.
• Governance: Establishes the AI Strategic Headquarters, chaired by the Prime Minister, with all Cabinet ministers as members. This body is responsible for formulating the AI Basic Plan, coordinating ministries, and overseeing implementation^[5].
• Enforcement: Relies on cooperative, reputational measures (investigations, guidance, public naming) rather than automatic fines or penalties, reflecting Japan’s “soft-law” tradition^[6].
• Scope: Applies to all stakeholders, including foreign business operators targeting Japanese citizens or businesses.

The AI Promotion Act is designed as a “fundamental law,” providing a high-level policy framework rather than detailed, prescriptive rules. It signals strong government support for AI innovation, aiming to reverse Japan’s lag in AI investment and adoption compared to global peers^[7].

1.3 Regulatory Reform and the Elimination of “Analog Regulations”

Japan’s digital transformation agenda is closely intertwined with AI policy. The Digital Agency, established in 2021, spearheads regulatory reform to eliminate “analog regulations”—requirements for physical documents, in-person procedures, and outdated administrative practices that hinder digitalization and AI deployment^[8]. The 2023 Digital Regulatory Reform Promotion Act and related initiatives have revised or abolished thousands of such regulations, accelerating the shift to online, data-driven government and business processes.

Key reforms include:

• Mandatory digital procedures: Replacing physical media submissions with online methods.
• Integration of My Number (national ID) and health insurance cards: Facilitating data linkage and digital identity for healthcare and other services.
• Technology maps and catalogs: Guiding ministries in adopting digital and AI solutions.

1.4 AI Governance: Soft Law, Interoperability, and International Leadership

Japan’s approach to AI governance is distinctive for its reliance on “soft law”—nonbinding guidelines, voluntary codes of conduct, and sector-specific regulations—rather than comprehensive, ex-ante legal restrictions^[1][3]. This model is underpinned by several factors:

• Cultural context: Strong government-industry cooperation, high social accountability, and a tradition of consensus-based policymaking encourage voluntary compliance^[6].
• Agility: Soft law allows for rapid updates and adaptation to technological advances, avoiding the rigidity and lag of hard law.
• Sectoral specificity: Binding regulations are introduced only in high-risk areas (e.g., autonomous driving, medical devices, finance), while general AI use is guided by principles and best practices^[1].
• International interoperability: Japan actively promotes global harmonization of AI governance through the G7 Hiroshima AI Process, OECD, and bilateral partnerships, positioning itself as a “trusted nexus” in global rulemaking^[6].

The Hiroshima AI Process, launched during Japan’s G7 presidency in 2023, established guiding principles and a code of conduct for advanced AI systems, with over 50 countries and regions participating by 2025^[5]. Japan’s AI Safety Institute (AISI) collaborates with international counterparts on model evaluation, risk management, and safety standards^[9].

1.5 AI Safety, Risk Frameworks, and AGI Perceptions

Japan’s risk framework distinguishes between real social risks (e.g., safety, human rights, misinformation) and speculative risks associated with artificial general intelligence (AGI)^[6]. Public anxiety about AGI is lower than in Western countries, influenced by cultural attitudes and popular media that often depict harmonious human-AI relationships. As a result, there is little appetite for sweeping, precautionary regulation.

AI safety is addressed through:

• Sector-specific regulation: For high-impact areas (autonomous vehicles, healthcare, finance).
• Guidelines and best practices: The AI Guidelines for Business (2024, revised 2025) integrate international standards and provide practical tools for risk assessment, transparency, and accountability^[6].
• AI Safety Institute: Develops conformity assessment methods, data quality management, and red teaming protocols, with a focus on healthcare and robotics^[9].

2. Research Institutions, Universities, and Talent Development

2.1 Leading Research Institutions and National Centers

Japan’s AI research ecosystem is anchored by several world-class institutions and national centers, often operating in networks that bridge academia, industry, and government^[10][11].

These institutions lead in both foundational research (e.g., machine learning theory, explainable AI, quantum AI) and applied domains (medical imaging, robotics, disaster resilience, language models).

2.2 Top Universities for AI Research and Education

Japan’s universities are globally recognized for AI research, with several ranking among the top in Asia and the world^[12]. According to EduRank and Times Higher Education (2025):

• University of Tokyo: #6 in Asia, #36 globally for AI; 51+ AI projects across disciplines; AI and Beyond Center; strong industry partnerships^[11].
• Kyoto University: #26 in Asia, #93 globally; AI theory, robotics, law and policy.
• Osaka University: #31 in Asia, #103 globally; leader in AI education reform and generative AI integration^[13].
• Others: Tokyo Institute of Technology, Tohoku University, Kyushu University, Nagoya University, University of Tsukuba, Waseda, Keio, Hokkaido University: All rank in the top 100-400 globally for AI research output.

AI education is a national priority. All university and technical college students (~500,000/year) are expected to acquire elementary AI/data science skills, with targets for 250,000 applied AI graduates and 2,000 expert researchers annually^[13]. Government-certified AI education programs and interdisciplinary curricula are expanding, with a focus on critical thinking, ethics, and practical skills.

2.3 Talent Development and Workforce Upskilling

Despite world-class research, Japan faces acute talent shortages in AI and related fields. Surveys indicate that over 70% of organizations are understaffed in key areas such as AI, cloud, and cybersecurity, with AI-specific skills present in less than 40% of organizations^[7]. The government has committed ¥1 trillion ($7.5 billion) over 2022-2027 for workforce reskilling, and 97% of companies are implementing AI training programs.

Upskilling is preferred over external hiring, as it is faster (5.7 months vs. 12.7 months for hiring) and more effective for retention. However, challenges remain in translating theoretical knowledge into practical applications and maintaining continuous learning environments.

3. Major Companies, Startups, and Investment Trends

3.1 Tech Giants and Industrial Leaders

Japan’s corporate sector is a driving force in AI adoption, with both traditional industrial giants and technology companies investing heavily in AI R&D, infrastructure, and applications^[7][14].

3.2 Notable AI Startups and Scaleups

Japan’s startup ecosystem has matured rapidly, with SaaS and generative AI leading funding rounds. In 2024, startups raised ¥779.3 billion, with AI-related deals dominating the top ranks^[14].

Other notable startups include LegalOn Technologies (legal AI), AI Medical Service (medical imaging), SmartScan (telemedicine), Hacarus (small data AI for manufacturing), and Atama plus (AI-powered education).

3.3 Investment Trends and Venture Capital

The Japanese government’s Five-Year Start-up Development Plan (2022-2027) aims to increase startup investment from ¥800 billion to ¥10 trillion, with tax incentives, public-private funds, and regulatory reforms to attract domestic and foreign capital^[14]. International VC participation is rising, with firms like Andreesen Horowitz, NEA, and Khosla Ventures entering the market.

Despite robust funding, unicorns remain rare (8 out of 1,250 globally in 2024), and the exit environment (IPOs, M&A) is still developing. The government and corporate sector are actively supporting AI startups through accelerators, subsidies, and infrastructure access (e.g., METI’s GENIAC project for generative AI startups).

4. AI Applications and Sectoral Breakthroughs

4.1 Robotics: Japan’s Enduring Strength

Japan’s global reputation in robotics is being redefined by the integration of AI, enabling robots to move beyond industrial automation into service, healthcare, logistics, and daily life^[15][16].

Key Developments:

• Telexistence Inc.: Pioneering humanoid robots with generative AI (Astra, Vision-Language-Action models) for retail (Seven-Eleven partnership), logistics, and data-driven motion learning. TX Ghost robots automate beverage restocking in convenience stores, while the Motion Data Factory generates large-scale datasets for robot training^[15].
• Service and companion robots: AIREC (Waseda University), Paro (AIST, therapeutic seal robot), Pepper (SoftBank), and Telenoid (Miyagi University) are deployed in eldercare, hospitals, and public spaces^[17].
• Industrial and collaborative robots: Mujin’s warehouse automation, Komatsu’s ICT-enabled construction equipment, and collaborative robots (cobots) in agriculture and logistics address labor shortages and productivity needs^[16].

4.2 Healthcare and Medical Devices

AI is transforming Japanese healthcare, driven by the twin imperatives of an aging population (30% aged 65+) and regional workforce shortages^[16].

Notable Applications:

• Medical imaging and diagnostics: AI Medical Service’s endoscopic image analysis (94% detection accuracy), SmartScan’s AI-based MRI diagnostics, and Cardio Intelligence’s arrhythmia diagnosis system are improving early detection and access to care.
• Regulatory innovation: AI software is regulated as Software as a Medical Device (SaMD), with fast-track approval pathways and update-friendly mechanisms (IDATEN, PACMP) to enable continuous improvement^[18].
• The AI healthcare market is projected to grow from $1.42 billion in 2024 to $14.8 billion by 2033 (CAGR 36.5%), with major investments in AI hospitals and digital health infrastructure.

4.3 Manufacturing and Industrial Automation

Japan’s manufacturing sector is undergoing a digital transformation, leveraging AI to address skilled labor shortages, increase efficiency, and enable high-mix, low-volume production^[17].

Breakthroughs:

• ARUMCODE (ARUM Inc.): AI-based software that automates machining program creation, reducing programming time from 16 hours to 15 minutes and cutting costs by nearly half. Adopted by 150+ companies, with plans to expand to 700 by end-2025^[19].
• Remote factory control: NTT’s IOWN photonics network enables real-time, AI-powered visual inspection and control of factories 300 km away, centralizing GPU resources and mitigating labor shortages^[20].

4.5 AI for Aging Society and Longevity Economy

Japan’s demographic imperative—36.25 million people over 65 (29.3% of the population)—drives innovation in AI-powered eldercare, healthcare, and lifestyle services^[16][17].

Solutions:

• Care robots: AIREC (Waseda), Paro (AIST), and Pepper (SoftBank) assist with mobility, daily tasks, and companionship.
• The longevity economy is projected to expand from ¥96 trillion ($652.5B) in 2023 to ¥115 trillion ($780B) by 2040, with AI and robotics at the core of new market opportunities.

5. AI Infrastructure: Data Centers, Compute, and Sovereign Models

5.1 Data Center and Compute Expansion

Japan is investing heavily in AI infrastructure to support sovereign AI development, cloud adoption, and quantum-classical convergence^[22][20].

Highlights:

• Government commitment: ¥10 trillion (~$65B) through 2030 for AI sovereignty, with ¥2 trillion allocated for 2024-2025 (chip and quantum research, domestic production, supercomputers).
• GPU deployments: SoftBank’s NVIDIA DGX SuperPOD (10,000+ GPUs), ABCI-Q Supercomputer (2,000 H100 GPUs), Sakura Internet’s NVIDIA HGX B200 infrastructure.
• International tech investment: Microsoft ($2.9B), AWS ($15.2B), Google Cloud ($730M) for data center expansion and AI research labs.

5.2 Sovereign AI and Domestic LLMs

To address language, privacy, and energy concerns, Japan is developing sovereign AI models and infrastructure:

• NTT’s Tsuzumi 2: Lightweight, high-performance Japanese LLM, runs on a single GPU, excels in business and specialized domains, adopted by universities and enterprises^[20].
• NII’s LLM-JP: National Institute of Informatics’ sovereign LLM, trained on Japanese corpora for cultural and linguistic accuracy, used in higher education and public services^[13].
• NEC’s Cotomi, Fujitsu’s Takane, SoftBank’s Sarashina: Competing domestic LLMs for enterprise and public sector use.

5.3 Quantum Computing and AI Convergence

Japan is at the forefront of quantum-AI integration, with government and corporate investment in next-generation computing:

• RIKEN & Fujitsu: 256-qubit superconducting quantum computer (April 2025), 1,000-qubit system planned for 2026.
• ABCI-Q Supercomputer: 2,020 H100 GPUs, Quantum-2 InfiniBand, used for drug discovery, logistics, and climate modeling.

6. International Partnerships, Foreign Firms, and Geopolitics

6.1 Global Engagement and Interoperability

Japan’s AI strategy is deeply international, emphasizing interoperability, standardization, and collaboration with global partners^[9].

• G7 Hiroshima AI Process: Japan led the creation of guiding principles and a code of conduct for advanced AI, with over 50 countries participating.
• Foreign tech firms: OpenAI and Anthropic have established Tokyo offices, collaborating with Japanese regulators and enterprises; Microsoft, AWS, and Google are expanding data centers and research labs.

7. Challenges and Barriers

7.1 Investment and Commercialization

Despite significant public and private investment, Japan lags behind the US, China, and South Korea in total AI funding and commercialization. Private AI investment was a fraction of global leaders in 2024, and unicorns remain rare^[23][14].

7.2 Talent Shortages

A critical bottleneck is the shortage of skilled AI professionals. Over 70% of organizations report understaffing in AI, cloud, and related fields, with AI-specific skills present in less than 40% of companies^[7]. The hiring cycle is slow, and new hire turnover is high (28% leave within six months).

8. Comparative Strengths and Recent Breakthroughs

8.4 Recent Breakthroughs (2023-2025)

• Telexistence’s Astra and TX Ghost robots: Humanoid and shelf-stocking robots deployed in 7-Eleven stores.
• NTT’s Tsuzumi 2 LLM: Lightweight, high-performance Japanese LLM adopted by universities and enterprises.
• ARUMCODE: AI-driven machining program automation, reducing costs and time in manufacturing.

9. Policy Recommendations and Future Outlook

Japan’s AI ecosystem in 2025 is defined by a pragmatic, innovation-first policy framework, world-class research and academic infrastructure, a dynamic mix of established and emerging companies, and a distinctive approach to governance that balances agility, interoperability, and international cooperation. The coming years will test Japan’s ability to sustain momentum, bridge gaps, and realize the full potential of AI for economic, social, and global benefit.